Drop shipping blues

One problem with drop shipping wholesalers is that most distributors who claim to be “true wholesalers” are actually middlemen instead.  In other words, a place you think is a wholesale drop ship business might be receiving goods not from the manufacturer but through another distributor. Naturally, they’ve marked up the price to make money themselves.  It is hard to make money online if you cannot get the goods yourself at good wholesale rates. You will in turn have to mark up the prices, but of course buyers might refuse to purchase if prices are too high.  At the rates you would have to charge, it may not be possible to make money online at all or the margins could be razor thin.

A second problem is that in some niches you may have a hard time getting distributors to work with you if you do not have a physical storefront, especially when your business is also brand new. You’ll have to be sure to check around for different suppliers or you may need to be flexible about what niche(s) to pursue for your business. Usually, you can find another brand with a similar product to sell. You could decide to source products through a middleman if you can find one with acceptable prices.

Many people want to sell things on eBay for starters rather than open an entire online store on their own to minimize the startup time, but eBay will take a cut from you and Paypal will, too, when you make a sale.  Especially with competitive things like electronics on eBay, it is very difficult to make any money if you can’t get low enough wholesale prices.  There are lots of other eBay sellers ready to compete with you and the buyers can drive a hard bargain, too.  A bunch of middlemen wholesalers charge a monthly fee to use them so you would have to earn enough to cover that as well. Avoid any place that requires a monthly fee!

When I first looked into a dropship based business, I was initially happy when I found a place to drop ship wholesale products after a little searching.  They had what looked like great accessories in a popular electronics category, so I decided to check for related eBay listings.  Reality smacked me: there were already 20+ listings on eBay.  About 18 of them had the same product photo that I’d seen at the supplier catalog, so I figured they must have been all using this same source.  Some of these things had not sold during their prior listing period and the ones that did sold at lower prices than I could sell at without losing money.  I found a second item that wasn’t as bad.  I saw that I could make a couple of bucks per sale…but of course then I realized I’d have to cover the monthly fee from the “drop shipping wholesaler”.  If I couldn’t sell at least 8 of these per month I’d be losing money.  All the sudden, the drop ship wholesale business model didn’t seem so great or so easy to do as I’d been led to believe.

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